Turkey seeks to reassure over central bank independence

Turkish Finance Minister Naci Agbal said the central bank will continue to be independent in the period ahead.

Turkey is seeking to repair damage to the central bank’s reputation – it is seen by many investors as an institution under government control. That image worsened last month when President Recep Tayyip Erdoğan said he’d exert more control over monetary policy after June 24 elections.

Agbal, speaking to TGRT television, said the government would seek to pull down inflation rapidly, tightening fiscal policy to bring it into line with monetary policy. It would use tax adjustments to help bring inflation down, he said.

Turkey’s central bank was forced to increase interest rates by 300 basis points to 16.5 percent last month after the lira slumped to a record low of 4.92 per dollar, raising fears of a currency crisis. Prime Minister Binali Yildirim sought Erdoğan’s approval before the decision was made, Bloomberg reported.